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Assignment On Shareholders' Equity

Pine Inc. had various shareholders' equity account balances at the start of 2021 and engaged in multiple transactions throughout the year, including issuing and buying back shares, declaring dividends, and reporting net income. The assignment requires preparing journal entries for these transactions and calculating the year-end balances for common shares, preferred shares, retained earnings, and contributed surplus. The document outlines specific financial activities and their implications for the company's equity structure.

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Zhijun Zhang
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12 views2 pages

Assignment On Shareholders' Equity

Pine Inc. had various shareholders' equity account balances at the start of 2021 and engaged in multiple transactions throughout the year, including issuing and buying back shares, declaring dividends, and reporting net income. The assignment requires preparing journal entries for these transactions and calculating the year-end balances for common shares, preferred shares, retained earnings, and contributed surplus. The document outlines specific financial activities and their implications for the company's equity structure.

Uploaded by

Zhijun Zhang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

BUSI 293

Assignment on Shareholders’ Equity

Pine Inc. (“Pine”) had the following shareholders’ equity account balances on January 1, 2021:

Common shares, unlimited authorization,


210,000 shares issued $1,680,000
Preferred shares - $2.50 cumulative,
100,000 shares authorized, 15,000 issued $562,500
Contributed Surplus (Credit balance) $ 30,000
Retained earnings $1,200,000

All shares were issued between 2017 and 2019. The last time the company declared and
paid any dividends was December 31, 2019. All preferred dividends were satisfied on that
date.

The contributed surplus arose from past common share transactions. The following transactions took
place during 2021:
1. On January 1, the company issued 25,000 common shares and received $225,000.
2. On March 1st, the company acquired a piece of land in exchange for common shares. The land
had a fair value of 200,000. The company issued 20,000 common shares.
3. On June 30th, the company declared and distributed a common stock dividend of 5 %.
The market value on June 30th was determined to be $11.00 per share,
4. On August 1st, the company bought back and cancelled 13,000 of its common shares for
$10.50. per share.
5. On September 1st, the company issued 20,000 common shares and 5,000 preferred shares
for cash. The cash proceeds received totaled $480,000. The fair value of the common shares
was deemed to be $14.00 per share on September 1st.
6. On November 1st, the company bought back 10,000 shares from one of the original
shareholders and the founder of the company. The company paid $17.00 per share.
7. On December 1st, the company’s board of directors declared cash dividends on both the
preferred and common shares. The total amount of cash allocated for dividend
distribution was $400,000.
8. On December 20th, the cash dividend was paid to the shareholders.
9. Net income for the year was $650,000.
Required:

1. Prepare any journal entries for the above noted transactions/events for 2021. While no
explanations are required, calculations must be provided. If no entry is required, state so and
explain why. (20 marks)

2. Provide the balance at December 31st, 2021 for the following accounts: (4 marks)

a. Common shares
b. Preferred shares
c. Retained earnings
d. Contributed surplus

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